Notice Of Defaults and Door Knocking | Real Estate Investor Meetup 9.26.22

You were first, so here's $100 grand. You ready?

For me?

Yes. Yeah, he's a lender, so he's gonna know all this stuff. Okay, so, uh, this is me. I grew up here in Orange County, started real estate in 1975. I know that was a long time ago, wasn't it? Broker, investor, mentor, regional broker for Pelago. Founder of H&M. I'm the H in the H&M Real Estate. It's my daughter's company. Over 500 flips since 1975. I wrote this a while ago. We're probably up to 750. We've got 22 flips going on right now. Here's my information if you want to like take a picture of it and save it.

Call me.

I also meet with anybody who wants to buy me coffee or lunch. If you buy one of those, I'll meet with you for an hour and I'll get you started on your real estate journey or answer whatever questions you may have. Okay, he owes me a lunch.

Okay.

What we're going to cover today: what is an NOD? Where is the document generated? How do I get access to this information? How long is the process? What tools do I need? We're going to talk about all those tools. Door knocking. Door knocking, for me, door knocking is probably the most important part of what I'm going to teach you tonight. And thank God we're all over COVID, and yes, I was door knocking last week. And I'm actually going out door knocking tomorrow as well. Okay, we'll talk about that. I do have some scripts available for the door knocking, which I'll, you know, I'm going to go into it, and the cold calling as well. What to expect when you door knock, excuses. I already took care of it. These are all the same excuses I get every day. I have someone helping me. I always ask them, who? There is nothing I can do.

Why?

My attorney. My attorney's helping me. Well, I do this free of charge. How much is your attorney charging you? They used to charge $5,000. I'm sure they're up to $10,000 now. Remind them of a short sale timeline. What is your goal? Your goal, you investors, Is to put the property under contract, either wholesale or to flip it. If you can't agree on a price, then ask them if you can list the home immediately, if you're a real estate agent. Okay? And if not sold, can always go back to a cash offer. Okay? So you're a real estate investor, you also happen to be a real estate agent, and you're talking to somebody, you just can't meet what they want for it. Then try to turn that into a listing, so at least you get something at the end of the day. If it doesn't sell, you're always there. Tell them, you know, we're here. I'm always here in case this doesn't sell in time. Then I can buy it from you. Door knocking scenarios. We're going to go into that. Make sure they know the reality of their situation. This is really important because I used to kind of. Describe it as they're kind of an ostrich and they have their head in the sand, and it's your job to pull their head out of the sand because a lot of people just want to ignore all this. They want it to go away. It's not going to go away. It used to prolong it for about a year and a half, 2 years to get foreclosed on. Now it's very quick.

Okay.

And we'll talk about the timeline. List the home for sale, quick sale to investor. Bankruptcy is not an option, okay? Even though attorneys— Even though attorneys are going to tell you it is, it is not. It's just a tactic to forestall the foreclosure. The banks are very sophisticated. They're going to take it into court, bankruptcy court, which is a federal court, and they're going to file a document and say, hey, This is what they owe us, you know, whether there's equity there or not. And the judge can look at that and say, you have a plan, you have no plan, okay, so take it out of bankruptcy, go ahead and sell it, continue with your foreclosure.

Okay.

This is an NOD, notice of default. Where is this document generated? It is generated at the lender level. The lender files a piece of paper with the county and records it there. It's called pre-foreclosure. 21 days is the auction period. If the stars are lined up correctly and you get this notice of default filed, you have 3 months and 21 days. Whether you're the first caller or the last caller, who knows who they're going to pick to help them, if anybody. So again, you can be the first caller or you can be the last caller. I'm the last one to call and they say, Joe, I got 10 days before they foreclose on me. Everybody else I've talked to says they can't help me. Can you help me? Absolutely, I can. Okay, it's a lot harder, but I can. Trustee sale, foreclosure auction sale, you must have cash at the courthouse. Okay, and I'm not talking suitcases full of actual cash. I'm talking cashier's checks. When you go to buy a property at the auction, you're going to have literally a bunch of checks because when I was buying there, I'd bring checks for $100,000. Maybe I'd bring 5 or 6 of those, $50,000, $25,000, $10,000. So I give them the amount that I have up to what I bid. It's usually over what you bid. You give them the whole amount and in 3 weeks they send whatever's left back to you along with the deed. Okay, so that's, that's courthouse. I don't recommend that you buy at the courthouse. One, right now there's not enough inventory. Number 2, you really need to know what you're doing because if you bid on the wrong trust deed, you may be bidding like on a second trust deed and then there's a first underneath it. So the, the process is Homeowner gets a loan, first trustee, then he goes out and gets a home equity line of credit, and then his brother gave him $30,000 one day to get him out of trouble. So he's got 3 trustees there. If the first forecloses, it wipes out 2 and 3. If the last forecloses, you still have to pay the second trustee and the first trustee. Okay, important.

Can you say it again?

Okay, so the process in buying at the courthouse steps, you want to buy the first trust deed. That's the first mortgage that the homeowner got. Then he went and got a home equity line of credit, that's number 2. Then his brother, to bail him out of his financial mess, gave him $30,000, but he was smart and said, I'm going to put a trust deed on your house, so that's number 3. If the first forecloses, he wipes out two and three. They're gone. Okay? If the third forecloses, he has to assume the second and the first. Okay?

So you technically will inherit the first debt and the second debt. Correct. Give a third one thirty thousand.

Foreclosures.

Correct.

And you don't know that at the doorstep?

You don't know that?

Yes, you do. Yeah, all that information is public record. I'm just telling you don't buy the third unless you think you can buy the third because there's enough equity still in there that it makes sense, but most of the time it doesn't.

Joe, what if, what if the seller is filing bankruptcy?

That forestalls it for a month or 2, and that's it. The first, if it's a bank, it's getting them out of bankruptcy court within a month or 2 at the most.

So I'll be able to buy it?

Yeah, absolutely. Once it's out of bankruptcy, you can buy it.

Okay, they wouldn't like— the bank wouldn't take it back?

No, no, the bank, the bank at the end of the day, they don't want this property whatsoever. They're not in the business of owning property. They're in the business of lending. That's their business. That's where they make their money. Okay, so if you borrow— don't answer— if you borrow $500,000, and I've asked this at meetings before, and you hold on to that loan for 30 years, at the end of 30 years, how much have you paid the bank back?

$300,000.

$250,000.

How much?

$500,000. $750,000.

Okay, 3 times, $1.5 million is paid back. So do you think that's what the banks want to do? They're going to earn $1 million in interest off of this loan for $500,000 over 30 years. So when a bank has to foreclose on somebody, do you like feel sorry for them? I hope not. No, you shouldn't feel— and then, you know, the last time we did it, the, the government, everybody here bailed them out.

Joe, I want to ask you, because I, I got a team into 2020 when the first pandemic hit, and there is a lot of foreclosure at the time. Before the last sudden, you know, foreclosure, and they waived the payments and all of that. And they had so many elderly that they just went into a reverse mortgage. Is that still the case?

Yes.

If it's a reverse mortgage, does it matter? They can't try— they can't—

So, um, if you're old enough, if you're old enough to get a reverse— yeah, if you're old enough to get a reverse mortgage The reverse mortgage pays you in two ways. They're going to loan you about what, 60% now? Yeah, 50 to 60. Okay, so 50 to 60 the older you are, obviously because you're going to die, you know. So if, if, if I was in need of money, I would do that with my property because I'd have two ways of taking that money. You can take a lump sum right away. And put it in your pocket and do whatever you want with it, and you live in the house for the rest of your life. Okay? They can't kick you out. Yeah. The other way is they pay you monthly like you're paying a mortgage. They pay you monthly. So however you want to do it, they can do it. The reason I would do it now is because the market's up here. So 50 or 60 percent of this is going to be up here. If you wait till the market gets down here and do it, 50 or 60% is way low. So I mean, if there's seniors out there and you need money for whatever reason, do a reverse mortgage and just live in your house for the rest of your life. You know, and even if the value goes down, okay, they— the banks cannot kick you out. And if they end up losing money because it's gone down, Oh well. Plus you're not going to care anyway.

Do they need to go by an interest rate on the reverse mortgage or do they just go by equity? Just equity, right?

Yeah, there's, there's an interest rate that's charged.

Yes. Do they do like today's interest rate?

I think so, don't they?

Yeah.

Reverse mortgage has its own interest rate, but it's very similar to regular rates.

Okay. Yeah.

Yeah, the nice thing of it is if you don't want to ever get kicked out of your house, Then do a reverse mortgage, and and hopefully you live to be over 100 like the queen. And you know, you you you got all this money either in your bank or you were getting money monthly to live on, whichever it is that you want to do. I don't encourage people to get a lump sum because it's like winning the lottery. If you don't know how to manage money, it's gone within the first few years. At least if you're getting you know three or four or five thousand dollars a month coming in, you know that's coming in for.

Do you know if, if you— there's some rules where you can't like rent the room out or separate spaces, earn income from the property where you still live in it because it's a reverse mortgage?

Uh, it's an unspoken rule.

I was going to say, if you told somebody that, shame on you. Okay, it's like I meet, I meet with people that It's not written in contract.

So you're not supposed to.

Is it in contract?

Yeah, it's in contract. You cannot. So if they're not on a lien with you, yeah, they can't be there at the property.

But unless it's a— like if they have a separate completely space like an ADU, that might be— they're not in the space, maybe.

Then it comes down to the lot. So if it's 2 different lots, maybe. Yeah, but if you're talking—

if it's an ADU, it's, it's together. Still together. Yes. So I meet with people all the time, and I'm you know five ten years ago I was meeting with people who were house hacking. House hacking is buying a four-bedroom house by yourself and renting out three bedrooms. And if one question anybody a tax attorney before I continue? No. The the one the one question I used to always ask them is like okay you got three rentals here. Do you declare the income that's coming in? Of course not. Of course not. Why would you? And they always used to say, yes, my accountant told me to. Well, of course, you know, he wants to keep you legal, so he's going to say yes. But, you know, why are you even telling anybody that you're getting this income? Nobody's going to know. It's, it's your house. It's a single-family house. It's different if, if it's a duplex or triplex. Whatever, it's, you know, separate spaces, but on your own house, boy gosh, if you're doing that. PropertyRadar is a program that I've been using for almost 20 years now. It gives you property owner information. It's all public records. It's $79 a month. They have a new thing that just came out that they have this new system. It costs more than $79, but they have it where you can do cold calling from within PropertyRadar itself. And skip tracing. Skip tracing gets those phone numbers that somebody may have unlisted or whatever. So they're trying to put everything together. Most of the time, like my wholesalers, we all have— they all have different tools that they use to get at the same thing. PropertyRadar just decided this year to put it all together. Obviously another revenue source for them, but you can check it out. PropStream's another one. They're $99 a month. This is where you're going to get all the information on Notice of Defaults. This is also where we pull our lists for the cold callers. So we'll pull a list of absentee owners from PropertyRadar, 250,000 of them. We send them overseas. All they do is call and say, do you want to sell your house? No, thank you. No, thank you. Yes, then it goes to my team to try to put a deal together. Okay, I don't want him wasting his time calling a million people a day because he just can't do it. I'd rather have somebody overseas that I'm paying a lot less to do that and send us what we call the warm leads. Okay, question?

No.

What's the difference between the 2, PropertyRadar and PropStream? Do they do the same thing?

They pretty much do the same thing except, like I said, PropertyRadar just put that other system in place. So if you wanted just to work with one system, then PropertyRadar. PropStream gives you all that information. If you're a real estate agent, you can get all this stuff from your title company, your title rep. They'll give you all this information and sometimes, I won't guarantee 100% of the time, but sometimes they'll actually give you a list With phone numbers as well.

Yeah, they send me on the weekly.

So there's a charge, but yes, there is. So if you go to your title company and you tell him— tell them to run it for you with phone numbers and sometimes email addresses, they will do it. There's a charge per person, and what it does is it sends it out, it finds out how many matches it finds, and then it comes back and you only pay for that amount. Usually you're paying like You know, in between like 400 to 500 on a 2,000 list, a 2,000-person list. So yes, they will do it. I know First American does it. The rest of them might not.

I actually get it for free, all the information on a weekly basis. They send— but I ask only for OC and LA, Orange County.

And which title are you using?

You know what?

I think first of all, I I forget.

Stuart, I don't do that as well.

Okay. For free phone numbers, he'll send free emails.

Yeah, Stuart.

Yeah, I'll send you a list around every week.

He'll send me like a one fifty information.

Correct.

They cannot give you that information.

Yeah, but it's not new information. It's only within their own database.

Okay. They can't give you that information. Okay.

It's like it's like it's like everything else. Okay. If you know a guy that knows a guy, then then you'll get it. Yeah, it's like here it's the ethical spectrum, and I'm a real estate agent. I've been over 43 years a real estate agent. Besides car salesmen, I think we're like right next to the ethical scale. Okay, so here you're at your ethical over here, but then on the other end you have this guy who he didn't even take a class that we're now required to take every 2 years. It's like it wasn't enough every 4, now it's every 2. So I'm not gonna, I'm not gonna go there. But anyways, yes, if you can find somebody and if you say Stewart Title, that's great. Now, will Stewart Title just give it to anybody or just real estate agents?

Or you.

Anybody who's a loan officer, real estate agent.

Okay, so if you're, if you're not affiliated with a real estate agent or a license, then they're not going to give it to you, which is what I found in the past. Okay, they do have what they call a customer service line if you have a question on one or 2 properties, they'll give that to you. But boy, when you start asking for a big list, they say, yeah, no thank you. Yeah, and they give it to real estate agents because that's how we give them business. So they're going to give it to me on demand, or, or you, obviously. I don't even get those anymore. So, uh, door knocking, um, the goal is to speak with somebody. That's your goal. Okay, literally knocking at the door. Hi, my name is Joe. I'm a real estate investor. I just bought the house down the street. We have some more cash we need to deploy. Are you interested in selling your house? Okay, I am not a traditional real estate agent. I'm not going in the neighborhood and passing out cookies and, and things like, you know, hi, I'm the best real estate agent in the world, and go to the next door. These are targeted. These are people who are going, Joe, I'm in trouble. I have a Notice of Default filed. Those are the ones that I'm door knocking. I'm not door knocking just everybody. I'm door knocking. Do I come right out and say that you're in trouble? No. I'll work that into the conversation if they're open to even listening to me. A lot of times if you're cold calling or even door knocking, it's pretty much the same thing. It makes it a little harder because you're there in front of their face. To you know slam the door or be rude. That's just human nature, but depends on who you are. You know some you're pissed off for some reason. Yeah, they're gonna tell you so. You know, but that's your goal to to talk to somebody because without talking to somebody you don't know. You know what's going on. Do not speak to anyone except the owners. No tenants, please. You go there and I'm just renting. Fine, have a nice day. See you later. Why? What's going on? Fine, thank you. Have a nice day. Okay, because the minute you tell a tenant, they're going to call the owner. Hey, why am I paying you the rent if you're getting foreclosed on? I'm going to stop paying you rent. Oh, who was that at your door? Yeah, and then my phone rings like, hey, why are you telling them that I'm in foreclosure? Because I'm still collecting the rent, right? Yeah, it's like house hacking. I'm still getting that. I'm not just Declaring it to, you know, the IRS. But yeah, am I going to get in trouble with all the new IRS agents that are being hired? They'll never find out.

They'll never find us.

Scripts are available, just ask me. Tag the door if no one is home, I'll talk about that. What is their situation? Lost their job. Does anybody think that people are going to start losing their jobs coming up pretty soon?

100%.

Yeah. If you have a home and you lose your job, what do you do?

Sell your home.

You can sell your home, especially nowadays, because you should hopefully have some equity in it. But again, if you get a notice of default, you have 3 months and 21 days. So is there an urgency? Absolutely. Knock on these people's door, find out what's going on. They've lost their job. Divorce is another big one. Divorce is really hard. If you're a real estate agent and you've ever handled a divorce situation, here we come back to attorneys, okay?

Yeah.

Their goal is to create conflict between the 2 parties. I've purchased homes at the courthouse steps that this couple left $100,000 sitting on the table because they were arguing. They could not agree to sell this home, so we got foreclosed on. So know that, that if it's a divorce situation in California, We're a community property state. Everybody has to agree, so you have to get both people on board. And of course, when I say I want to be, you know, he wants to be my agent, and then my wife says I don't like him, I'm going to go pick her. And now what do you do? So it's, it's sometimes difficult to do, but you can do it.

I saw a case where 2 agents for the same property, which is That's a good idea.

Split the commission, better than losing all of it. Yeah, that's a good idea. Same company or different companies?

2 different companies, 2 different Japanese.

Nice, nice. Uh, death of the owner. Um, I've been calling notice of defaults, um, and I actually skip trace their names, and I also get phone numbers, email address, and I get ages. And I called on one today, and she was like eighty, but nobody answered. So I got Alex going out there this weekend to door knock to see what's going on, who's living there, is it a relative that's living there or whatever? Okay, so we're all headed the same direction, right?

Bringing up like the death, how it works. Because I had also people that they're on foreclosure, and then when I called, it's just the person passed away.

Okay, so, so in a death, it depends on how the property is titled. If it's titled in their name and they die, it has to go to probate. Okay, if they have it titled in their living trust, then the heirs can sell that property at any time. There's no court approval that's needed. If your home right now is in your name and your husband's name, awesome. When one of you passes in California, it automatically passes to the other. When that person passes, it goes to probate if you do not put it in your living trust. Probate will take 40% of your profit. Between attorneys and government fees. Here we are, attorneys, gosh. Anyways, yes, estate planning. Yes, thank you. There you go. Then that's the person you should be talking to if you're a homeowner, okay, and you have it in your name, just your name, or your name and your husband's name, okay, as joint tenant. You're going to get away with it once, it's going to go to the other person, but then after that you need to talk to her to do that correctly, okay. The only other way is put it into an LLC. Most properties that you live in are not in LLCs because it's not a business. That's why we have her doing what she does, living trust. Thank you.

Yes.

Get after it.

Not to put you, not to put you on the spot, but can you tell me how much a living For a single person, um, I won't tell you what I charge, but what typically, you know, um, single person between like $1,700 and $2,200, and a married couple anywhere from $2,700 to $4,000.

Where's your practice at?

Well, I'm in Orange.

Okay, okay.

It depends on—

it sounds like Newport Beach pricing, but that's okay, that's okay, that's okay.

So that also typically includes your advance directives, your medical advance directives, you know, wills with guardianship provisions if you have minor children. So it's more than just creating the trust.

Okay.

Okay.

I just opened a trust for myself, about $800,000. If anybody's interested, they can contact, I can give you—

Okay.

They live in Mission Viejo, not here, the office in Mission Viejo.

Okay, so any other, any other questions on the death? So yes, on this property I called, if she's passed away and the property was just in her name, which I know it was, then yes, it's going to go to probate.

So it goes together, like the lender is going to record the notice of default, but in the meantime, you're going to see a notice of default, but in the meantime, it can be in a probate?

Yes, yes. So now, now it's a race To see who gets it first. And I can tell you the bank's going to get it first. Probate takes about a year to do.

Oops.

Okay, so the bank is going to foreclose. Those would be the homes that you would want to go to the courthouse steps to bid on because there's probably not a big mortgage on that. There's still a lot of equity, but the only legal way to get it would be to go to the courthouse steps. The family just can't say, here, it's yours. That doesn't work. What to expect when you knock on the door? Excuses. I mean, just constant excuses. I already took care of it. And I'm the type that always asks questions. So if you're not asking a question every time, you're not doing your job right. Okay? I already took care of it. Really? What did you do? I hired an attorney. Oh, I'm sorry, because I could have helped you. I could have helped you for free. How much did your attorney charge you?

Really?

Yeah, he charged me like $5,000. Really? What did he suggest? Oh, I do bankruptcy. Oh, okay. Well, you know, you have an attorney. If that doesn't work out, here's my number. Give me a call. Okay. I have someone helping me. Again, who? I've got a real estate agent. Oh, really? When's the last time you talked to your real estate agent? Oh, it's been a couple months. I go, well, then do you know what— do you know that— what is it that they're doing if they haven't contacted you? I don't know. That's a good idea, Joe.

Maybe I should call them.

I go, yeah. Be a good idea. Here's my card. Call me when you're done with this guy. Okay? There's nothing I can do.

Why?

There's always something you can do. I mean, literally up to the last minute. My most profitable flip last year, one of my cold callers called the guy. He said, I'm in foreclosure. I've got 10 days to do something. I've talked to my best friend who's a real estate agent, because everybody has a best friend or a relative that's a real estate agent, and he says, no, I can't do anything. I said, Well, you didn't talk to the right person because I can. Okay, so the first thing we did, we put them under contract and I said, here, take this contract. You need to call the bank because the bank will only talk to the owner of that loan. They will not talk to me or anybody else. They talk to the owner of the loan. Tell them you have an offer, send it to them, and ask them to postpone the foreclosure. The banks are nice. They, they're not really nice. I'm just saying they're nice and they'll do that one time, but that's it. So I got them to postpone it for 30 days. We closed 15 days after that. Okay, so yes, there's ways to do it. You just have to kind of know what to do.

While they're talking to the bank.

Yeah, correct, that you can do that. Yes. My attorneys help me. I do this for free. Remind them of the foreclosure timeline, 3 months. 21 days. Okay. Now, you stop making your payment the first month, the bank sends you a little letter says, I know you forgot, it was an oversight, please send it. The second month they don't get it, they go, oh geez, I guess it wasn't. Yeah, if you don't send it, it's— we're going to get serious. The third month is when they file the notice of default. So they're already 3 months behind. That starts the legal process again, three months, twenty-one days. During that time, the banks can you know postpone the sale whenever they want. Let's say the the guy calls and says, "I have a real estate agent, and we've listed the property." Great. Let's see if you can beat the clock. Okay. They will sometimes put you. on what they called the 3-payment plan. We, we will think about modifying this loan for you. Does everybody know what modification is?

No.

Okay, modification— you have a loan and let's say it's $500,000 and you're paying 5% and you just can't afford that. So the bank says, okay, we can modify this. So we'll take the interest rate down from 5% to 3%. Can you make that payment? If the guy doesn't have a job, how do you expect them to make the payment? Okay, so 95 to 100% of loan modifications at the bank don't work. Okay, they just don't. But they put you on this 3-payment plan. Send us 3 payments and we'll stop everything while we're doing this modification for you. Why? Because they want the 3 payments. And then at the end of those 3 payments, you get foreclosed. Okay? So even if you had a loan for $500,000 and we reduced the interest rate down to zero, okay, you still have a payment. You don't have any interest, but if you don't have a job, how are you expected to pay that? Why would they modify this for you? They don't. They don't. Okay? Answer your question?

Yes, thank you.

Okay. These are the door tags that I use. Okay, so I hate wasting time. So if this kind of looks familiar, it's like a UPS tag. When I go to the door, if nobody answers the door, I will put the name of the property owner on there, and then the transaction or tracking number is the assessor's parcel number. So if anybody's aware what the assessor's parcel number is? No? Yes? I mean, if you're an agent, you know. What?

It's on the deed.

Yes. So the assessor's parcel number on a property is like a license plate number on a car. Okay, so I put that on there so I know when this person calls my number, okay, to say, hey, what's the package I have that you guys are going to deliver? Okay, and he gives me all his information. Including his phone number. Okay, then I call him back and I go, hey, I'm your package. I'm calling because, you know, you have a notice of default and I'm an expert on notice of defaults and I can help you. What is it that you want to do? Oh, Joe, I want to save my house. I want to live here. Do you have a job?

No.

Do you have any money? No. But you want me to save your house for you? Yes. Okay, whatever. Okay, so yeah, so this is the tag that I use that I put on there. Okay, mailers. Does anybody do mailers in here? Okay, mailers are a waste of time and money. Sorry, sorry, sorry. They're a waste of time and money. What is your response rate on mailers?

Reverse mortgages and cash outs for people who are in not good spots.

Different, different. I'm talking about notice of defaults or just asking people if they're wanting to sell their trashy house. They don't care about it. They want to know, okay, well, you left this thing, you know, it's like UPS. I want to know what I got. Okay, I better call this number and find out. Joe, do you put the APN number versus the phone number?

Tracking?

Yes, tracking number.

You put the APN number there?

Yes.

And you put your name on there?

Yes, yes, yes. So I know who's calling every time. I just track the APN.

There's nothing—

there's—

it doesn't mean anything?

No, the phone number is 800 number that I don't have now. I just put a regular Google Voice number on there, and I've got a recording, and they call And I don't even answer the phone. The recording says, hi, we're out delivering packages.

Are you serious?

I'm serious. I am serious. Alex, you have the number?

Okay, this is great.

Dial it.

This is awesome.

What's the number?

Talking about scamming.

What's the number?

977. No, no.

That's awesome.

What's the number?

Yeah, that's the number right there.

I'm gonna call it right now.

Well, that's the number.

No, no, no, no, no. I'll explain why this number is there, but Alex, could you, uh, could you call the number and put it on speaker for us, please?

Oh, you don't want to always have the number now?

No, you can have it. It doesn't do you any good. I mean, unless you're one of my agents, I'll let you have it. And you can— and yes, and you can use the tags. And when we get the leads, we'll send them to you.

I'm sure you will.

Of course I will. Of course I will. Why? Why would you doubt me?

He's giving you the secrets, though.

No, no, I'm here. I love it. I think it's great.

I'm giving you the secrets. Okay.

I will make it look like.

Oh, it changed.

Bam! Love it! You're so creative. Kudos to you, man. That's awesome.

Huh? And I like it because Lauren, his fiancée, future wife here next month, she recorded that. And I told her to put down there that you know we're out delivering, okay? And then you always kind of hear like our menu has changed. You hear that all the time, right? So I threw that in there too. I said, "Just put that in there too." You know, make it sound real. And I'm telling you, I get a 95% response rate from these people.

So what happens when they call back? Are you they call?

So they call back. I give the lead to the agent that. Tag the door. And the way I do that is you put the assessor's parcel number plus your initials. Okay, so if I know that your initials are on there, I will send you the lead. Then it's up to you to call back, and you can do a lot of things. You can say, hey, I've got a package for you, when are you going to be home? I can deliver it. Then you're there in person.

Do you take them something?

I do have a package that I take them. Yes, I give them instructions. I give it— yeah. I give them— I give them instructions on how people commit frauds with notice of defaults. Okay, don't get taken advantage of. I give them obviously information about me, and I am also a homeowner advocate. Okay. I like that. And homeowner advocate, and my job is to advocate for people who have notices of defaults and help them out. Later on, I'll tell them I'm a real estate agent. But again, I'm there to help you. Okay? I want to be nice and help you.

Okay.

Oh, definitely. No, it's just like cold calling them. It's like you know they're either going to say yes, I'm interested, or they're going to say no. They're going to go no. They're going to go through all this. I've got somebody taking care of it. I paid that off. I hear that a lot too. It's like, really? You paid it off?

I see you over it.

In your dreams you paid it off. You're telling me that, but I know you didn't pay it off. Okay, so it's like anything, you know, it's like I hear him literally all day talking to people and yes, no, maybe so, you know, the F word, whatever. Okay, whatever it is, it's going to happen out there as well. It's going to happen less if you're knocking at the door because like they're right there. So people are pretty polite when they're in your face. You always have that person that's not, you know. I don't know, you look like really mean or something. I'm going to send you back $100 grand because— sorry, because I don't know if I'd knock on your door if you answered. It's like Oh God, you got tattoos and you know. You know what? Yeah, you probably wouldn't want to knock on my door. See? See?

If my name ever comes up, just go.

Yeah, let's pass. Let's pass. Let's pass. Well, you never know. You never know. You never know. You never know. The other thing I will tell you as you're door knocking, obviously guys, if if you Get a lady behind the door like her or her, you know, whatever lady. It doesn't really matter if it's them two and they invite you in. You need to be careful. Maybe you ought to make an appointment to come back when their husband's at home. Okay? Not saying you're going to do something wrong, but—

They may accuse you.

They may accuse you. And the same thing with ladies. I don't recommend ladies go out door knocking by themselves. Please take a partner with you.

Okay.

Unless, you know, don't shoot me unless you're one of these liberal ladies that says I can do anything a man can do. I warned you, okay? It's like, I'm absolved. If you want to go out by yourself, man, more power to you, okay? I'm going out with one of my agents tomorrow at 1 o'clock to door knock. This is the second time. I usually just do it once, but she asked me really politely to do it again, so I'm going to go out again. She's a little skittish, so I have to kind of get her to the point where you know she's just doing it by herself. And if you're a lady, don't even door knock. Just throw this tag on there and then let these people call you back. Like you know. Yeah, do that. What is your goal? Put the property under contract to either wholesale it or flip it yourself, or if you're an agent, to list the property. If you can't agree on a price and ask them, you can list the home immediately, and if not sold, you can always go back to a cash offer.

Joe, aside from being like an agent, if an investor want to buy it, like you want to buy it yourself, you have to come up with the cash, right, for the lender, or subject to? You can do a loan, hard money loan, but don't you have your regular loan?

You can do a regular loan.

Don't you have an X amount of days to actually resolve it? Let's say it's on the 89 days or like 80 days.

Yeah, so then you talk to him and he says he can get you a loan in 10 days.

What's the fastest loan you can do?

Or maybe hard money then.

Or hard money, correct. Or hard money. Hard money, hard money you can do in a short period of time. But if you have enough time, you can do a regular loan on that property.

Yeah, I think sub-to is probably the best option.

You can do that, but then you're going to have to make up everything that they haven't paid before. So that could be— around here it could be $25,000, $50,000.

That would be the money that you have to pay them for this, the spread of the equity anyway.

Correct. Yeah.

But it's just easier so you could take over like right away.

Correct. Yes, if you can talk them into it. Yes, absolutely.

I just want to throw in something here. Mike's deal might just close. We— they were with, um, Wells Fargo couldn't do it. There was state, uh, stated income, you know, bank statements. Company out here in Mission Viejo, 2 and a half weeks, closed it. Bam! Couldn't believe it. It's like less than 2 and a half weeks, closed. It's awesome. If anybody wants the name, let me know. I couldn't believe it. Bank statements only.

Uh, what?

The one that, uh, 2 weeks ago, she called She wanted me to remove the loan contingency.

I forgot. You do, you do a lot of deals, so—

The agent that she called you about me not removing the—

Oh yeah, that's because you were arguing with her, so she thought calling me would get her— give me on her side, and she, she doesn't understand me whatsoever. Yeah, it's like calling me is going to resolve that issue.

Yep. So on the subject to, just quick question on the subject. Have you ever done a subject to in those particular cases?

Yes.

That, that, that just means a stipulation that they're probably going to get out of the property though, so you still have to put that whole getting out of the property clause in there?

Yes.

Okay.

Yeah, well, you're going to get the deed anyway, so it's going to be your problem.

It doesn't matter, they can still— they're still on the property, so you got to get rid of them.

Yeah, well, they're the homeowner, they're the homeowners, so they should go out cooperatively, but I don't close a deal until they're out.

Yeah.

Either that or I hold money back in escrow to make sure that they move, which is, again, my most profitable deal last year was a foreclosure that I held $20,000 back in escrow to make sure he moved. He didn't move for 6 months. The nice thing, I bought it for $750,000, the ARV was $950,000, Remember last year? Yeah. So by the time I sold it, it was 1.3. So was I worried that he was in there? No. It was like, I'm looking at the market that's going like this. I'm going, okay. So I don't get him out. I called him literally once a week just to tell him, hey, are you ready to move? Almost, Joe, almost. I almost found a place, you know, and then I'm thinking, well, should I start eviction? Well, I don't want to do that because The minute I do that, that goes on his record. And if he's out there looking, are you going to rent to him if he's been evicted before? No. So I'm kind of shooting myself in the foot. So again, I look next month and it's like, okay, we've gone up another 10%. Crazy. Okay. So, but he finally moved out in 6 months. But again, it went from $950,000 ARV to $1.3 million.

I'm actually using that on all the ones that, like, on the regular contract. If I have a property with somebody living in it, they need an extension of time or they need a leaseback, I'm still holding money on there.

Oh, absolutely, you should.

Every single time.

You should. And I'm thinking $20,000 is a lot of money. Wasn't to him. By the way, he lost it. Oh yeah, I kept the $20,000. That was our thing. If he moved out in 30 days, he gets $20,000. If he doesn't, I get to keep it. And the most important escrow instruction you'll ever do in your life On a deal like that is it automatically gets released on day 31. Okay?

Yeah.

Because what you have to understand about escrow, they're a neutral third party. They can't do anything without the buyer and the seller agreeing. So if we come down to day 31, the escrow company is going to say, okay, well, I need to get his signature so I can give you the money. No, if I write it up the correct way, day 31 means that it automatically goes to me. There's no further signatures needed. It went to me. Okay, so I'm $20,000 ahead, but still I'm crying for 6 months that he's there, but not really. Not— they're not crocodile tails. Yes, correct.

He was smart about it because he passed the The past the amount of days, the 30 days, he lost the 20, so he wanted to make use of it.

No, probably. Yeah, you're probably correct. You're probably correct. Yeah, you're probably correct.

In other cases, if he leaves after 40 days, you're in a really good spot.

Yeah, but he would have taken the $20,000 by down payment on a house.

Yeah, no, no. In today's market, I'd hold back $40,000 or $50,000. Yeah, that for some reason $20,000 didn't wake them up in the morning. You know, it's like, okay, you know, but yeah, $40,000 or $50,000 is going to wake you up.

So in a subject-to, the deed changes hands but the mortgage doesn't? Correct.

Yes.

But isn't it the riskiest choice to go to subject-to?

Risk for who?

For you as a buyer, risk for the seller more.

Risk for the seller. Yeah, it's not risky. Okay, so what you might be referring to is the bank can call the loan due.

Yeah.

Okay, in my 43 years of doing this, I have never heard of a bank calling the loan due as long as that payment keeps being made.

Even if they figure he just sold Subject to?

Yes, they don't, they don't go that far. They get their payment in and then the little computer says, oh, we got our payment. They don't care who it came from as long as they got it, and they don't check anything else. It's when you stop making your payment, that's when they start checking. And then if they find that out, yes, they're going to start foreclosing on you, but I've never had that happen.

Never.

At all.

Okay?

Okay, so speaking with a willing homeowner, find out what's going on. That's really important. You need to build some rapport. You need to say, okay, what's happening? You know, well, my husband lost his job. Okay, so what is the likelihood that he'll get a job back in 3 months and 21 days?

Not good.

Not good because he had a really bad job. So he's not really employable. We were kind of lucky. Okay, so then you go into their options. Okay, you have enough equity here, you can list the home with me, we can sell it, we try to get you as much as possible within that time frame. But remember, we are on a time crunch. Or you can accept a cash offer right now, which is what he does. And he says, you want a cash offer, you want the easy way out.

Okay.

You push the easy button. This is what we're going to give you. Okay, just the balance of the mortgage. Wow, you're like really greedy. I get, I give, I give them, I give them, you know, it depends on what the equity is, but at the very least I'll give them probably $5,000 walking away money because they need to go someplace.

Oh, you're greedy too then.

No, I just said it depends on what the balance is. So let's say it's $100,000 Equity, what would you give them?

I would just do $30,000.

How much?

$30,000.

Okay, yeah, that's fine.

Is that— that was my question. Is that the norm? I mean, now everyone is building equity out of thin air.

Yes.

So for now, yeah. So they couldn't sell, you come in, you're the only one that could offer them something, right?

Yes.

They'll take whatever. Like, they'll take whatever it takes to just not have that foreclosure happen.

So that's, that's your job, to talk them into taking whatever. And if $30,000 is agreeable to both parties, then you have a deal.

So you only offer $5,000 on a $100,000?

No, I'm just saying that if there's nothing left, like let's say there's, you know, nothing, literally nothing left, but I still want the deal. I'll give them $5,000 just to walk away.

So I see what you're saying.

Like a moving, moving.

Yeah, yeah. So talk about, uh, real quickly, so we're on the subject, talk about, uh, building equity out of thin air. Alex has a mobile home that we're selling. We're getting ready to close on hopefully in a few days here. He bought it 100% financing from the seller, seller financing. Okay, he bought it for— how much did you buy it for? $200,000. The seller did seller financing on it. He just put it back on the market. We have it under contract for $220,000 or $225,000? $220,000. We're selling it owner financing again because The first guy didn't put a due-on-sale clause, so the new buyer's coming in and assuming that loan that's already existing. And then Alex created a second loan for $40,000 that he's going to earn about $450 a month.

The spread?

The spread, yes. So that's creating equity out of thin air. Yeah.

The original seller, was he in distress? Did he need financing?

No, he had, he had, no, he had so much money that he didn't care to get the money. He would rather get the payments every month.

But as long as the actual owner of the mobile homes is getting his monthly, he probably wouldn't even care about doing sale anyway because he's getting payments anyways.

Correct.

He's not expecting any cash.

Correct.

Unless there's a balloon or something.

Correct.

Yeah.

That's absolutely correct. How can you help them with situation? Make sure they know the reality of their situation. Short period of time for foreclosure. What are the options? Quick sale to an investor, list the home for sale if you're an agent, if there's enough time. Bankruptcy is not an option. It only stalls the foreclosure by a few months. Marketing, you can create— these are 2 websites that I've created. I can tell you, you know, a website's a website is a website. Just because you create a website doesn't mean you're going to be a millionaire tomorrow, okay? It's like, no. These websites I've had for close to 10 years. Carrot websites, yeah. The one on the right is Flip Homes OC. I get a lot of investors that go on that website, and I, you know, send them out information and teach them how to do a lot of this stuff. The one on the left is my son-in-law's, and that's supposed to attract sellers. Maybe I've gotten 1 or 2 in the last year. So we're better off doing what we're doing with him, is cold calling, because website's not going to make you a millionaire. Comparable analysis— what is it? When you do comps, you have to figure out what it's going to sell for at the end of the day. Do you want to try to go back 3 months? Don't go back longer than that. Right now we're having to deal with the crazy prices that we experienced last year. So now we actually go back a year and 3 months to get those prices because everything's going back down. Because you can't go back 3 months now because if you determine that this is the after-repair value 3 months ago, you're going to be wrong because the market's going down. Within one mile of the neighborhood, smaller size home, square footage or lot size, smaller bedrooms. Pay attention to positive attributes. ADUs for potential rental income. Remember, real estate agents are people that market homes for sale, so a lot of them pull put like words like pool size lot. It doesn't have a pool, but it's a pool-sized lot. So don't get caught up in their verbiage. Possible ADU, okay? Does it have one? No. But it's good for marketing. Oh gee, Joe, look, I can put an ADU in here. Yeah, you know how much an ADU is gonna cost in Orange County? Close to $200,000, okay? Unless he does it, he'll do it for less.

'Cause it comes up with the search. You do like advanced search on Zillow or Redfin and you only want like a house with an APU, it will come up even though it doesn't have it because it's in the description.

Oh really? Okay, so that's not good. Uh, pay attention to negative factors. So road noise, if it's on a busy street, I take 10% off. Uh, proximity to freeways, and I'm not talking good proximity, I'm talking like you're backed up to the freeway, you know. That's not good. Airports obviously are not good. I mean, look at the people in Newport Beach. Have you ever flown out of Santa Ana?

No.

Why are we doing that? Oh, because these people down here in Newport Beach complained, we have to do this. You know, and the pilot's up there going, okay, make sure your belts are tightened because this is a strange takeoff. And you're gonna— we're gonna seem like we're flying into space. Space like Elon is doing, but we're really not. It just seems like that. And then he goes all the way up, I mean, full blast, and then he cuts the engine. And I'm thinking, well, what? Where the hell are we going now? He's like, boop. Okay, so that matters, believe it or not. Another thing that matters— so I was flipping houses in Laguna Woods. If anybody knows what Laguna Woods is, a senior community. 55 plus, okay, and I have a lot of people say the same thing. Some of these places are along El Toro Road. El Toro Road is the noisiest freeway in the world, and I mean, it is noisy. And so you go over there and they go, well, I'm buying this for my dad and mom and they can't hear anyways. Believe me, they can hear. I'm telling you, they can hear. Seriously. My dad, we were buying a place for him when he got to that point in Rancho Santa Margarita, and it backed up to a busy street. And my sister said, oh, that's okay, he can't hear anyways. You know, we ended up buying it, but the first thing he did was complain to me, there's too much noise back there. I'm going, close the door. You know, I close it. I go over there in the middle of summer, I'd walk in, I'd go, holy moly, it's 80 degrees in here. What's going on? Oh no, I'm cold. But they can hear. Believe me, they can hear. Okay. If you want to use our website, pelago.com, you just literally put the address in there and it's going to walk you through every number that you need. It's going to tell you what the after-repair value is. It's going to tell you how much it's going to cost to rehab. It's going to tell you closing costs, it's going to tell you hard money costs, and then it's going to tell you if you buy the property at this amount, you're going to make this much or you're going to lose this much. So this is a great website because it has everything that you need in one website. I teach others how to do things differently, but this is, this is our go-to on the way back. I have an app that when we're out in the field looking at properties, we can do comps in the field. But this is like when you're sitting down, you know, trying to evaluate this property whether it's a good deal or not. This is the website that I would recommend, not because it's mine, because it's really, really good. Okay, we use 3.5 to 4.5 of ARV to estimate closing costs, title, escrow, all that stuff is in there. So example, $600,000 property. 3.5%, $21,000, 4.5%. So you can see the numbers go up. If the agent wants to charge you 6%, it's going to be $36,000. So you're flipping this house, you're making $50,000 at the end of the day, and you go, shit, the real estate agents made $36,000. What did they do? Nothing, right? We don't do anything, you know, not a thing. And anyways—

Not a lot.

Anyway, so you have to, you have to keep an eye on your numbers.

You can't see when—

Okay, you have to keep an eye on all your numbers. If you're flipping properties, you come back to me. I'll give you the deal of the century. I only will list it on the seller side for 1%, and then it's up to you if you want to list it for 2% or 2.5% on the other side. So 3% to 3.5%, you're not going to beat that. Barely much anywhere, but that's, that's one of my plugs while I'm going along here. 1%, that's good. Step 1, establish the ARV, establish rehab costs, and we're going to go into this a little bit more, but rehab costs, I use 10% of the ARV. So if I'm, if I'm buying a house that costs $675,000, it's probably going to take a minimum of $67,500 To rehab. Okay, now this is not this is not a house that I go out to and the roof is you know really bad. There's electrical issues. There's plumbing issues. This is a house that basically pretty much a little bit more than cosmetic work. Okay, it's going to cost you about sixty seven thousand. Okay, unless you're a contractor, you can do it for less.

Please wait, it comes. This just like a number per square feet? Because at the end of the day, it goes to this square footage. If you have 1,500, you're gonna pay this much.

You can do $35 to $45 a square foot, but at the end of the day, the only reason that I do this is because I get about 10 to 15 properties presented to me a day. And if mine— if these numbers don't work, I'm not going to get off my butt and go look at this property. Why waste my time? Yours, I knew right away that it would work, but then he blew me off on, you know, seeing the property. He didn't call me back. It's like, forget it, you know?

That's exactly what I did. There is one guy, he's like, I'm gonna need $250K to $300K to put in it. I said, okay, I'm— $250K to $300K, it's 1,600 square feet. How much per square feet you're gonna put Look, you're not to take this—

I'm just messing with you. You know that, okay? Because if I had offered $100,000 or $1 million for this property, I would expect them as an agent, not only my agent, but as an agent, to get this property up to whatever value he got it up to. Even though he represented both parties, it was way more than I was willing to pay. So he did the right thing, okay? Remember ethics?

Yeah.

He's obviously ethical. Closing costs, 5% of after repair value. That includes commissions, that includes escrow, that includes title. Profit, you want at least 10%. So my maximum allowable offer, 70%. I'm actually at 60% now. On this property would be $472,000. So if they wanted $500,000, how could I get to $500,000? What would you, what would you say I would do? If if they're wanting 500 and this shows 472, how would I get the 500?

You list it.

No. With these numbers you're looking at, how would I get the 500? How would I get the 500?

Price you need to drop.

No. I want to I want to get up to where they want. So so what would I do? Drop our profit. Drop my profit, exactly. That's a lot of profit on a flip. Okay, like, everybody happy with that, right? But if I wanted to get it to $500,000, let's take $25,000 off of there. Now I'm at $75,000 profit. Am I still happy? Yeah, hell yeah, I'm still happy. So that's how you're going to work your numbers. Okay, don't be greedy.

Joe, can I ask you something?

What I recommend to new people, if you're not experienced, is that you put the property under contract. Once you put it under contract, you have a contingency period that you can back out. That's when you call your contractor. Because would you be happy if I called you every time I was going to go look at a house? Other than if I'm training you, would you be happy if I drug you out every single day and said, here, let's go look at this house? Did you get it, Joe? No, but thanks for coming.

Do you usually give that 7-day For that, uh, that clause in there, 7 days to back out of the contract?

Yeah, if you're working under a CAR contract, it's 17 days. If you work— yes, if you work under my contract that I wrote, well, my attorney did, it's 21 days.

Oh wow.

Okay, I have a contract. I'm happy to share it. You go back on meetup.com and I put it there as a link. Okay, my contract is written to protect me, nobody else. Okay, I did a property in Aliso Viejo, put it under contract. The guy wanted to back out the next day. I said, yeah, my contract doesn't work like that. We have a valid contract, you signed it. In fact, that one was in front of a witness, my son-in-law, but a witness. Okay, and he says, oh no, I'm going to contact a real estate agent and Because they contacted me, of course they did, and they think I can sell it more on the regular market. I said, nope, I have a way out because I'm the buyer for 21 days for any reason. You do not.

Nope.

Okay, so he didn't believe me. They listed the property. I called the agent, they blew me off. I called their broker, he said, I agree with you 100%, I do this as well. Nothing happened for 2 weeks, no word. I called back, he said, oh, we're going to listen to the client. I go, even after I told you, and even you told me that, you know, this was not legal? Because in the real estate contract it says if you're under contract with somebody else, this is not a valid contract.

Exactly.

Yeah, so okay, whatever. So then I got my attorney.

We're going to get there sometime.

My attorney's been around just about as long as I have. He charges like $500 an hour. But he knows what he's doing, so he sends him a nice little letter that you have to sell this property to my client or we're going to sue you. Didn't listen, so we ended up suing him. You put on on title what's called the less pendence—a lawsuit. The less pendence ties up that property so nobody can sell it until it's cleared. Okay, so then he calls back and says, "Hey." His attorney, okay, remember, remember, Joe, yeah, you guys are full— well, he told this to my attorney— you guys are full of bullshit and you can't hold my client to this. You know that as well as I do. And my attorney's just like laughing on his end, you know, and he goes, well, okay, whatever, do, do whatever you want at this point. You know, we have the lawsuit there and it's not going anywhere until you decide to resolve it. So he saw the light and decided, okay, we'll let Joe buy it. You know, that was another one. I bought it at $5 million, the ARV was $6.50 million. I ended up selling it for $8.50 million. Yeah, because the market was doing this.

How was the close? How did it feel at closing?

It felt wonderful. Uh, you know, the, uh, the attorney, I mean, he charged me like I want to say like $2,500 at the end of the day, which, you know, yeah, in the long run it's not nothing, um, or it's just, you know, whatever. Um, but nobody wants to pay that, but, you know, it got what I wanted accomplished. Okay.

Now, did all this happen within that 21-day period, or do you have a contingency that if it goes beyond the 21 days after you put that, um, that lien on, or not lien, but So the contract is a contract.

The 21-day period is for me, not anybody else, not him. So the contract's there, it's a valid contract, and even after we agreed to sell it to me, I could have backed out, you know, even though it was longer than 21 days. The 21-day period, you know, goes into effect when he lets me have possession to go do the inspection, even though I did all that already.

Okay.

So this is a list of what I pay. Remember I said like $75,000? This is actually a condominium, that one that I'm just talking about. It's a 3-bedroom, 2-bath condo, and this is what I paid. Now remember, this is about 2 and a half years ago now, so you can imagine how much prices have gone up. So you can see everything that I did in the property. And how much it costs at the time. I do stage my homes, that's $1,800. Flooring, exterior paint, drywall, all that stuff. It kind of adds up.

Oh yeah.

Kitchens, kitchens I pay anywhere between, depending on the size, $7,000 to $15,000 for a kitchen. Again, depending on the size of the kitchen. If you go out and you check with Angie's List or Craigslist and find a contractor to do a kitchen remodel, you're going to pay $40,000 to $50,000. This is what I do it for. So if you're going to become a flipper, you need to have those relationships because if not, you're going to lose your shirt. This is the Pelago website. Wow, that was quick, wasn't it? Um, it's, it's changed a little bit. This, this is when it had property tabs and, and custom tabs. I'm going to get down to— this is, this is what you should be looking for. So it's going to give you carrying time, 5 months. Please don't go over 6 months. This is hard money. It is expensive. So the longer you take, the more it's going to eat at your bottom line. So you have to make sure you're ready to go from day one, because if you're not, you've lost. So in this, in this case, um, you can see the cash-in was $73,000. This is just a small property that bought for $213,000. Uh, the purchase loan's costing 12%, rehab loan— because they will give you money for the rehab. Well, obviously they charge you interest. So if you, if you see that the after repair value is $362,000, purchase price $213,000— I'm rounding— rehab $62,000. There's your buying cost, there's your carrying costs, there's your selling costs. Don't forget that because you have to pay the real estate agent and title and escrow. Then you're making $38,000 on this property. Total ROI is 12.99%. I look for 10%. Okay, so if it's not 10%, I don't do a deal. It's got to be 10% or more.

So what's the cash-in price?

That's the, like, the down payment and, and yeah, the 20%, correct. Yes. Okay, you can see the cash ROI. Okay, that's really high. Because you're only putting in $73,000 on this deal. So that's going to be really high. If I were to uncheck these 2 on the actual website, then that's going to go down. My total ROI would go up, but that would go down because it's a cash deal. So you asked a question the other day, I believe it was you. Was it you?

Yes.

Asked a question about If you had $100,000, or maybe it was somebody else, I meet with a lot of people. If you had $100,000, what would you do, Joe? I would buy 10 properties at, you know, putting $10,000 down instead of buying one property that's $100,000. Why not? You make, you know, $40,000, $50,000 on one, why not make it on 10?

Assuming you can find 10 deals.

Yeah, yeah.

No, it takes a lot of work. Yeah, don't get me wrong, it takes a lot of work. And then there's also a rental tab on there, so if you decided you want to rent it— here in California, I don't recommend that you rent anything. You're not going to cash flow. So, you know, unless you're up in the mountains or out in the desert someplace and you're going to turn it into an Airbnb, properties in California really don't cash flow.

At all. Is Warren Buffett still your agent?

He is. He is.

Wait, that's my question, Joe. That's my question. That one. Yeah. How do I get a hold of Warren Buffett? No, no, but is that something we can do? Do you know about that? I don't know.

What? That section. Yes. See where it says rental tab?

No, no, no, no. Ask about this property. Oh, yeah. Is that something we can do? Do you know?

My name's on there right now, and I've been trying. I've been trying to get them to put all the agents' names on there to share the wealth, but they haven't come up with that yet. So my name's on there, and I, I can tell you that I don't get a lot of leads from this. And then the leads I do get, I farm them out. You, you get them. Yeah.

And then question 2 is, um, I know I use Pelican California But I can't get it to work in Texas, right?

Because we don't have an office in Texas. Florida and Washington.

Oh, so those are the only—

Yes, yes.

So you own the actual—

No, no, I'm just a broker for California.

Florida, where?

Yeah, for the whole state of Florida. Yeah, so you can do the same thing here with Florida property and Washington property.

But we can't sell properties.

You can refer them. Get a nice 25% referral fee. And then if you're really kind to me again and you buy me lunch or coffee, I'll upgrade your plan so that you can save this and you can send it out to other people. Okay, it's free to use, but you can't do that unless you, you know, reward me. I sound like an attorney, don't I? Sorry, I'm picking on you tonight. I told him I was going to pick on him, but you're a better target. I love the joke. You're way— see how she is, huh? She can take a joke. Yes, when you're 18, it's like, you know, is he being serious or not, you know? No, we tell them all the time at the office, like, we're not serious. We're just, you know, kind of manning you up, right? Kind of manning you up. You know, this is this dedication. Where do you live? Every day, twice a day, back and forth. Yeah, every day. Good for you.

You come down.

Sources of capital, how to fund your deals. Money flows to the deal. You won't— you don't need the money first. You have a good deal, I'm happy to buy it from you or partner with you. Okay, uh, learn how to find distressed properties first, which is what I'm teaching you. There will always be a buyer or partner if the numbers are good. There is more money available than deals. That's what this hard money situation is all about. They've got the money, but they will do the same thing you're doing. They'll figure out, okay, well, how much is he going to be able to sell this for at the end of the day? We're going to loan him this amount of money. And if you're new, you get charged 10%, 2 points. I don't recommend any more than that. How much do you charge for hard money?

Oh, hard money.

Well, personally, I charge 2. Personally, for me, I charge 2.

2 points? Total points? That's what I heard. Okay, so how much do you— if I was a client, how much are you going to charge me?

Depending on the deal, up to 5 or 6 points.

No way.

Yes. Oh, absolutely. Because he works for a company. He really doesn't work for a hard money lender. He works for a company. So what does he do? He tacks on his 2% onto the normal 2% or 3%. Okay, so you don't want to use him for hard money.

Absolutely not.

Okay, and if you have flipped 10— if you have flipped 10 or more properties, you're down into the 7% interest, half a point. Okay.

There is one thing that maybe you didn't tell these people yet, which is the budget. The properties at what budget? Do you do the $2 million, $8 million, any type of property you find, or like just in $500,000 to $1 million? I know what you do, but I just want you to—

Yeah, I'm doing $500,000 or less right now. I'm concentrating in Riverside. And San Bernardino. I will do property here in Orange County, but then I'm getting up into right now into the million dollars. I can do 2 properties for that. Why would I want to buy something here? So I concentrate out there right now. If you're a high-end flipper and that's what you like doing, you like, you know, buying properties— I have an agent that buys properties for $5 million In Northern California, he tears them down and he puts back a little mega mansion, they call it, and he sells it for fifteen million. Well, that's fine. If that's what you want to do, then that's fine.

It's just. Do you advise with that?

Oh no! If you're starting out, please start out down at the bottom. Yeah, start out at the bottom. Okay, we we kind of went through this hard money. 1 to 2.7 to 10% interest. Went through that. Joint venture. So define— if you're working with somebody, please define your responsibilities clearly. Create a joint venture agreement. Usually there is a financial partner and a partner that handles the rehab. Okay, so if you wanted to partner with him, I throw the money in, he takes care of handling the rehab. At the end of the day, we split the money.

Nope.

Okay.

Skin in the game.

Huh?

Skin in the game. He's got skin in the game.

Yeah, he's putting up the rehab money. Yeah, yeah. So I'm just describing what a partnership might look like, but make sure it's all in writing so that you don't have any conflicts along the way. Um, try not to invest with relatives. That doesn't work out a lot. Yeah. So these, these slides are available if you go to Meetup and the description, there's a link to all these slides. Okay.

So the first 90 days, the owner of the house is not paying, then at day 91 they get that notice for another 90 days.

Once those 90 days are, are over, then No, you have 21 days for the auction period.

So those 21 days you could resolve the foreclosure?

Yeah, you can still resolve it all the way up to the last day if you can get the guy to call the bank, and if the bank says, okay, we'll postpone it for a month.

They're okay to actually get an offer from you?

Yeah.

Where they could like not stop and then freeze it, right?

Yes. They'll postpone it. Yes, yes. So I mean, these are just other investment opportunities. BRRRR, everybody should hopefully have heard of BRRRR. If you're not, if you haven't, then if you're not a member of BiggerPockets, I have nothing to do with it other than I'm on there a lot. And BiggerPockets is having a conference next month. Is anybody going? You're going? I will see you there. Where's it at? It's in San Diego. You're going? Sure. You're paying $1,200 to take another $1,200. It's $1,000, but the company's paying for me, so what do I care? Yeah. If you go on Meetup, on my Meetup, I have a Meetup over there. I don't know when you're going to get there, but on Saturday, From 3 to 5 at a bar. I'm meeting a lot of my agents. You're welcome to come if you want and hang out with us. Maybe meet some of my San Diego agents. You as well. If you look on Meetup under my Meetup thing, I'm meeting on Saturday with all my San Diego agents from 3 to 5 at a bar.

Oh.

Yeah, I don't drink, but at a bar. Okay, so if, if you're down there that early, then please stop by. Okay, okay. So if you've never been on BiggerPockets, I would go on BiggerPockets. They have a free membership, just start with that. And then—

It's all investors, right?

It's all investors. It's all investors. You ask questions, you get answers. And then if you like it, then if you want to pay for a membership, that's up to They give you more things as you pay for more things.

Okay.

70% rule, which is now at 60%. Full BRRRR is pulling 100% of your money out of the project. So you go in, you buy it at a price, you rehab it, you refinance it, you pull everything you put into it out, then you rent it out. Not really something you can do here in California, mostly out of state. But there it is. And it's really 50%.

Did you say 60% of ARV minus the rehab costs, which is 10%?

Yeah, yeah, yeah. No, no, this— it should be 60. So that's telling you, that's telling you it's 60, even though it says 70. It's 60. No. Thank you for pointing that out. But yeah. What's happening now? Historically low inventory. Still, we have low inventory. Don't think we don't. Has the bubble burst? Yeah, I think we're at that point where it's burst. We'll see how bad it gets. If this stupid crazy Fed keeps raising the rates, which I think he's going to do, it's really going to start getting bad. So your goal is to learn as much about real estate as you can, okay? Whether you're going to buy notice of defaults or whether you're going to fix and flip, put, put all those education together, have your team in place ready to go. When the prices start dropping to a point where you start seeing investors coming back in, that's the time to start buying. And you'll know that when it happens.

Okay.

My agent Warren Buffett likes to say, when people are rushing out, you should be rushing in. So look for that happening. I saw it clearly 13 years ago when we went through this. I saw it clearly. What did I do? I rushed in and started buying everything. Everything I could put my hands on, I was buying. And that's when I do my buy and holds. Here in California, and not before. Okay, stock market at lows. Geez, did you see the stock market today? It's like ooh bad. Buyers market. Yeah, we're kind of getting into that. Slight growth appreciation will continue. Forbearance rate is extremely high. Does everybody know what forbearance means? So if you have a loan during COVID The federal government told the banks that you can't foreclose on anybody, and we're going to do one better. They don't have to make the payment anymore. So they literally stopped paying their mortgage for 2 years. So then they needed to figure out an exit plan. The exit plan is they called it forbearance, which means that the banks did a loan modification, but they did it differently in that they said, okay, all this stuff that you didn't pay us, let's say $50,000 for the last year or 2, Remember your loan was $500,000? Now we're going to rewrite it. Your loan is $550,000. We're going to keep the payment the same, but you still owe us $550,000. That's called the forbearance.

How are they going to keep the payment the same?

What?

How do you keep the payment the same?

Because the bank said that they're going to keep them the same.

So that your interest payment would wind down?

No, they just charge you what they were charging you. Okay, so for example, most forbearances are 40-year loans. Yeah, not 40, not 30.

Also, you increase the term? Yes, yes. I thought some banks—

maybe you could answer— some banks said that they were gonna— they had to pay back after 12 months or 24 months and pay the lump sum, or no?

So there's a few options.

Someone— forbearances, they— and to kind of elaborate more on what your question was, those take that balance that they agree on not paying, they'll put it at the end, and that accrues its own interest too. So that's why the payment keeps the same, but your overall term is lengthened. Yeah, that's what I— and then you also pay more at the end of the loan.

But do all the lenders allow those? I heard a couple lenders said you have to like 12/30.

There are— yeah, there's another variation where they'll have that due at the end of 12 months, or they'll make it to where it balloons. That little balance balloons. Yeah, yeah, there's different variations.

So do you think— are you seeing Have you seen any like foreclosures and people not be able to make— obviously make that balloon payment? Obviously they can't make it.

Some people, but depending who you talk to, you can get rid of that by doing a cash-out refinance depending what lender you go to.

Well, not now.

Yeah, they're getting foreclosed on.

Which is, if you're a real estate agent, the opportunities that are coming.

Yeah, that's what I'm waiting for.

Yeah. Uh, market margins will continue to become compressed. Foreclosures on the rise. That's why we're here. A recession is here. I think so.

Oh yeah.

Things to watch out for: trade war with China. We're still in a trade war with China. War with Iran, I don't know. I don't know if you follow the news at all. Some young lady got killed because she wasn't wearing her headscarf, and there's, there's protests in Iran left and right right now. So who knows, maybe they'll resolve their own issue.

I doubt it, but No, it's not just in Iran, it's all over the world.

Is it?

All over the world.

Yeah, but we don't care about the rest of the world. We care about Iran. You know, they're the idiots over there. So if we have somebody over there different. Jobs report, so keep an eye on the jobs report. If people start losing their jobs, then you're gonna start doing, if you're an investor, you should unfortunately start doing the happy dance because you know there are gonna be foreclosures out. You know there are gonna be people, you know that you're gonna have to talk to people. You know, door knock and, and, you know, don't send letters. Sorry, it's your money, you can do whatever you want. Okay, same with you, you can do whatever you want.

We pay 25%, so he got the money.

Yeah, yeah, yeah, yeah. But you need to talk to people and you need to be, you know, educated enough to, to talk to them, you know, wisely. Okay, uh, forbearance and foreclosure rate, the end. Questions? Do I— I mean, do I— tell me this, do I— have I tantalized you enough that if you want to do this, you're able to find all the tools necessary to do this, or is there any questions? Well, I have a beginner's question. I only charge half for that, but go ahead.

In wholesaling, when you're signing a purchase and sale agreement, I mean, you need a proof of funds. To show that you can actually purchase this property before you assign it to an end buyer, right? Otherwise—

I can tell you that 95% of people that you work with will never ask you for that. And the 5%, okay, email me, I'll send you a proof of funds.

It's easy to get, right?

Yes.

But how, how do you What verbiage do you use to explain? I mean, as a wholesaler that doesn't plan to buy the property in my own cash, how do I present myself and say, let me get this, you know, let me sign this contract saying I'm going to buy your house in cash, but it's not actually me that's going to buy it? Like, how do you—

And/or assignee.

Don't really say that.

Yeah.

Right.

Your contract says, hopefully your company name and not you. Right.

Okay. And you cannot trace to yourself and, and/or assignee.

And/or assignee. Yes. Okay. And then just like he says, you never mention that.

But it's a clause in the contract that this contract is assignable. Yes. Right. At the discretion of the— yes, the buyer.

Yes. Um, when, when you signed into Facebook, did you— I mean, you're an attorney, so when you signed into Facebook, did you actually read The user agreement?

That one, probably not.

Okay, that's what happens with these deals. I mean, they look at the price, they look at the parties involved, they look on how much they're going to get at the end of the day, and that's it. They don't really delve into the contract at all.

How does it look at closing when it's not the person they've been speaking with the whole time who's actually— they're getting the money?

No. So if he puts a deal together, I expect him to continue to talk to this person until we've closed.

Okay.

Because that's the relationship that he's built up.

Exactly.

Yes. So other question, let's say he's just going to wholesale this out because we buy everything that he gets under contract, but that's because we flip a lot of properties. But let's say you're going to be a wholesaler, you should never only You should never open up escrow, and you should never put the initial deposit into escrow. Never, never put your money at risk. Never. The minute that you assign it to me or somebody else, I put the money into escrow.

Okay.

Okay? And then yes, at the end of the day, if you pay too much and you call me and you go, Joe, you want to buy this? I go, sorry, you paid too much. You may have to call. Yes, you may have to call this person back and either get that price down or tell them, you know what? The world fell apart. I'm sorry, but I need to cancel this contract. Remember my contract? I've I've written them correct. Yes.

Okay. You know what's interesting? The person selling and I don't. Had a couple transactions that I've done that, but the person selling it has less understanding of what you're doing than you do, right? My first time, I was like sweating. I'm like, I wonder if he does— I hope he doesn't ask me this, I hope he doesn't ask me that. He didn't ask me a thing. He said, where do I sign? Uh, sign. He didn't ask him for anything. Did it— it actually was the contact for the escrow.

He would call me instead of calling escrow because they have no clue that they couldn't call escrow.

Escrow directly and have a conversation with them, even though I tell them, call escrow, they'll tell you everything you need to know. I opened it with $5, by the way.

I opened up my escrow with $5. Nice.

I gave them $5. That's it. All right, so you have to find an escrow company that understands what you're doing, right? An experienced agent. And then they will walk you through it. They literally will walk you through it. They said, Leo, we need this. Got it, I'll go get that. We need this, and then also have Joe.

I called Joe like 500 times. He called me as much as he does. Yeah, and I still don't have any lunch.

Oh no.

I'm watching the kid, that's why I can't go out.

And the bird. I heard the bird this morning.

Yeah, he's got a bird.

DoorDash.

I don't do DoorDash. You have to physically take me out, you know. I swear. Yeah, I don't eat at my office. Right? I don't eat at the office. You know, I've invited him.

Every day from 12 to 1.

That's right. I've invited him to go when he first started. He goes, no, Joe, I've got something. And I invited him again. He goes, no, Joe, I've got something. I go, Eric, okay, when I invite you to lunch, you go. Okay, simple as that. And then so we go the first time and he's being mentored by another Wholesaler in my office, and we get back and Carlos is his name. Carlos goes, what did you ask Joe? He says, oh, I didn't ask him anything. He goes, why? You had him for an hour, you know, ask him. That's how you're going to learn.

Yeah.

Yeah, that was my point is when I ask you for lunch, come out to lunch and learn something. You know, I like to teach while I'm eating too.

So you're saying don't put anything into escrow?

Do not put anything into escrow. You're not going to take that contract.

Right then and there?

You're going to assign this to somebody else. So you're never going to take this money and put it into escrow after the seller signs it. They may think you're going to open escrow, but you do not until you've assigned this to somebody else. Okay, so when you do go open escrow, that's what—that's the amount that I'm going to put in. If I—if I buy from you, I'm going to put $100 into escrow to open up escrow. Okay?

So I think you should put your three percent or ten thousand or something.

No, no, you're real estate agent. Okay, you're thinking real estate agent.

So I have a question. So this is this is interesting, right? So you're hosting like if you're If you're a wholesaler, this is— I'm asking the question and kind of giving the answer at the same time. If you're a wholesaler and you're saying like, hey, I want to make $10,000 on this deal, right? So that you got it for $500,000. That means that when you go to Joe and you say, Joe, I'll sell you this one for $515,000, he says, no, I'll give you $510,000, right? So you're at $510,000. You should have Joe give you $10,000 in the escrow so that that way that money's set there That's the way I would structure it.

Yes.

I don't know what your thoughts are on that.

Yeah, well, when you work with me, I'm not just gonna, you know, let you have $10,000 unless I know we can do the deal. But yes, at the end of the day, when I know we're going to close, that $10,000 is going to be there to pay you. Yes.

So the buyer actually never knows anything once—

I mean, the seller never gets anything No, when we open escrow, yes, yes, yeah. And it's, it's his job when that seller calls and says, well, this is not the name I signed, he's, he's basically gonna say, okay, well, we sold this to one of our business partners and that's why you're getting it in that name, but everything's fine, we're getting ready to close, don't worry.

Well, I'm a little confused. So she He just said when they sign the contract, you give them money?

No.

Yeah, so he said no. Can the seller see this extra $10,000?

No, that's a good question. I don't know if you heard it. Can the seller see the $10,000 I'm paying her? So there's 2 sides to a transaction, the seller side and the buyer side. On my side, you'll see $10,000, but the seller will never see that $10,000. There's a lot of wholesalers out there that they'll do what's called the double close, and the reason they do a double close is because when they sell it to me, which I don't buy from them, they want to close the first transaction so that I don't see how much money they're making.

Okay.

Because normally when you're working with me, I can see both sides because I know how to see both sides. But the seller normally will not see both sides. Okay, they won't see that I'm paying her $10,000.

I did structure 2 deals. One of them, the Laguna Beach one, it was, okay, how much you're asking for? You want this much, $3 million. Okay, I'm selling it for more. We'll go 50/50 on whatever extra. And it wasn't a contract. And they were like so happy with that. I negotiate the $3 million to start with.

Okay.

I don't believe this is worth $3 million. This is $2.8 or $2.5 or whatever. We agree on that. And then what's over, we, we split it or 60/40 or whatever it is. And everyone is happy. They know that there is a transparency. This is with That specific seller, yes, because he needs the truth and he needs everything clear. He doesn't have any issue with money as long as everything is— but for some others, maybe—

She used to work for Redfin. That's what Redfin does, is they'll put the property under contract to go in and do some minor fixing up, and then they split the profit, right? At the end of the day, with the seller, they don't even split it with the seller. Whatever the difference is, they keep. That's what they do.

Yeah, see, they do Compass. They do that too. Yeah, I bought it outright and flipped it, and it wasn't just minor fixes. They did some major stuff.

You know, you're reminded, but you can write a contract like he was just explaining with a seller if You know, they will agree to you going in and fixing up the property. So all you're putting in is a rehab, and then anything above this price you split. You can we can write a contract like that. That's fine. I mean, that's another way to get into a property with the little money down. Yeah. Yeah.

One thing I do reminded me of, which is open door. You know, you're familiar with.

Yeah.

So how to compete with them at this point? Because they're getting more and more savvy. They have escrow, they have title, they have everything.

Yeah.

And I saw so many of their properties, they buy it for $700,000 and they, they put on the market at $680,000 and they sell it.

They're, they're a big company. Uh, ask Zillow if they made money flipping properties.

No, no.

But they are a big company. And what you have to remember is there's a lot of properties out there. I get this question asked all the time. Joe, you know, are you getting all the good deals out there? You know, there's a lot of deals. Just go find them. You know, Alex brings me good deals. It's like, where's he finding them? He's cold calling these people. He's putting them under contract, sometimes seller financing. Sometimes the price is so low that we're, you know, just cashing them out and rehabbing them. They're out there, you know. Open Door can't take every property. There's no way they can do it. They can't take every. Zillow found out that their Zestimate is worth nothing. Oops, I'm still on mic on. Sorry, Zillow.

I actually lose two deals for Open Door. Yeah, no, we lose them all the time.

The Open Door. If if somebody decides yeah, you're selling.

Yes.

Buy another one.

Yes.

I am a broker and I will get you another one. So they're buying the property and they're buying him another property.

Their margins, like you said, may be totally different. Maybe they have their own escrow company, so they get money from the escrow company when they use your— they use their escrow company. Their contractors, I'm sure, aren't getting paid, you know, like a normal contractor would want to get paid. They buy it and resell it.

Fridge and all the appliances, they take it, okay, and they resell it.

Just put it on the market the second. It is, it is what it is.

But yeah, the thing is that big companies don't always have the right answers. You can look at Blockbuster. Blockbuster would buy up all the little small mom-and-pop shops.

They could be right across the street from each other. Let me see what happens. I mean, just because you're big.

Just because you're big and you can do a lot doesn't mean you always make the right decisions.

Yeah, yeah.

Zillow's problem— Zillow's problem is they're not local, and they were acting like they were, and they were doing their Zestimate and it was way too high. One of my agents had a property in Rancho Santa Margarita, and he wanted me to help him sell it. I went over there And I go, sorry to tell you this, but it's distressed. Okay. He goes, Joe, I know that. I go, you're not going to be able to get a lot of money on this. So I would say put it on the market for this. And I said, well, let's do this. Before you do that, call Zillow and ask them how much they'll pay. They paid him $80,000 more than I told them to list it for. Wow. He closed the deal with Zillow. It took Zillow six months to sell his house at a loss. Yeah, so he was like he he bought me lunch. He's doing the happy dance. He's going Joe, thank you for that. You know, it's like yeah, I don't earn a commission, but that's okay.

So I have a client who we just recently lost. He really wanted this property. It said. Probate, okay? So they took somebody else's offer. Uh huh. It was at 1.95. I don't know how much they offered, but he wasn't willing to go. But now he really wants it. Is there a chance, or how do I find out when that court date happens?

You know, it's public record, but try try calling a listing agent to find out. I mean, they may not tell you because you know obviously they have an interest in. Selling it like that. I will tell you, when you go to probate court, you have to bid 10% more of what the offer is, and then the next person has to bid 10% more than that.

Oh, okay.

Yeah, but that'd be the only way. You can call, um, on my website I have probates. You can call that probate attorney And he should be able to tell you. He's a really nice guy, very nice guy. He should be able to tell you, you know, here, look it up here. This is this is when it's going.

Okay. So for your wholesalers, I know you mentioned sometimes they can agree to a purchase price that's more than you're willing to pay, so you have to go back and like renegotiate or. So from the example you showed, you showed that you would offer up to 70% of the ARV, but you're willing to change that and cut into your profit. So how much more are you willing to, I guess, cut into your profit in terms of interest?

That's an individual choice, whatever you're willing to do. I don't go down less than— I want to make at least 10%. But if you're just starting out and you're happy with 7, then fine, then you're happy. It's just because you're wearing a mask. Are you from Orange County?

I live in Anaheim.

Oh, okay. Yeah, we stopped wearing masks. Like, I'm not, I'm not picking on you, but I am. Yeah, we stopped wearing masks 2 years ago, but that's okay.

and you're doing a sub-to, when you write the agreement, you gotta put like how much money you're gonna put down on the, on the sub-to that you're gonna give to the, to the owner. Do you specify that this money will go to the lender so it can satisfy the lender, or do you expect that the owner will take care of it? Like, how would the lender—

So hopefully you're opening up an escrow for this deal, and once you open up an escrow, they're going to get a demand statement And they're going to make sure that all that money goes to the lender. It's not going to go to the owner. The owner will get the bottom line, his bottom line at the end of the day, but all that is going to go to the loan, the company.

You don't have to specify it in the first place? No. Okay, because it's in a pre-foreclosure status? Correct.

I see. Yeah. You've got to excuse me, I don't know much anything about real estate, but when you're in escrow Like that with the home, does the escrow go back to check on what you were talking about? The second, and when he takes money out, the escrow takes care of that. So they'll make you aware, hey, whoa, this guy took a second out and then he borrowed from Yahoo over here.

Yes. So when you're talking to these folks, those are questions you need to ask. Is this the only loan that you have? Is there another loan? Do you have a tax lien? Have you not paid child support? HOA lien.

But I'm saying if they like you because all they're seeing is money, because they're like, I got to get out of this, I'm going to need cash. Yes. And they don't make you aware of that thinking that they're going to get away with it, escrow would be able to catch that, correct or no?

Yes, they will catch it. That's what title does.

Yes, I'm sorry, I already had title.

Yes. So I had a guy call me last month. He goes, Joe, you buy houses? I go, yeah. This is what I got going. I got this house in LA. It's worth— it's probably worth $3 million. I want to sell it for like $1.5, somewhere around there, maybe $2. Is the real value that high? I go, okay, why? He goes, well, I've got IRS problems. And he says, how can I, how can I do this so that they don't know that I saw— I did this? I go, well, there's ways to do it. I go, where are you, where are you taking your money? He goes, well, yeah, kind of Cayman Islands type thing, you know, whatever. Yeah, you know, that's what he told me. That's what he told me. You must have been on the call. He goes, well, okay, let me, let me check with my attorney on what I can do. But, you know, you want to buy it for $1.5 million? I said, yeah, I can buy it for $1.5 million. It's worth $3 million. Why wouldn't I not? You know, and he says, okay, so then how we can do it? I go, that's easy. We can, you know, put your property in, you know, an LLC that you own. And then the money is going to go to wherever you want to send it to. Escrow doesn't care. They just care that they're sending it to the rightful owner. You're going to show them that you're a rightful owner. And then if it's your property, you're not going to have to have any withholding for IRS purposes. So yeah, you're good. You know, we can do this. That's up to you. You know, obviously I'm not going to do anything illegal, but I can kind of show you Okay, how to do it? What you do with your money is not on me, you know, it's, it's, it's you, you know. Well, you think they'll be able to trace me? I go, it depends how bad they want you. I mean, this is the federal government, so, you know, if they really want you, um, I can tell you that, um, I, I'm very familiar. I know a lot of FBI agents who do fraud stuff, and if it's not more than $10 million, they don't even look They don't have time. It's got to be 10 or more, and like right now it's probably 50 million or more before they wake up and say, yeah, we'll look at this one. Yeah, they just don't have time to do it. So I called him, I left him a message yesterday. He hasn't called me back. So I don't know if the FBI knocked on his door already or what, you know, or if he just changed his mind. I don't know. Whatever, you know, whatever. Those are interesting calls that I get. Yes.

So if I want to work with you as a wholesaler, I got to find a property that's 60% of ARV and I got minus whatever my— what I profit I want to make, and then you'd be interested, you know, basically.

Yeah, you can, you can do, you can do 70%. I'll look at it, but It depends on where it's at and how much it is and what the rehab's going to be.

How are you getting the ARV?

Because you repeated that exercise and everybody had a different ARV.

Yeah, and I would have too. So, you know, I do the ARV the way I do it and, you know, that's the number I come up with. If it's different than yours, then that's what we have to discuss.

Yeah.

Yeah, that's what we do. But I had 3 of them in my office teaching them how to do this the other day, and they all 3 came up with different numbers. Yeah. But that's okay. That's how you learn. Yeah. Any other questions? I mean, if you really, really want to do like the easy button, you know, PropertyRadar, look for notices of default. It's really easy to do. A lot of them have phone numbers on there, emails as well. If you just want to call them and start doing that, if you want to get more active and go tag the door, if you want to send emails, you don't get a big response with emails, but it's cheap. It's nothing. It doesn't cost you anything. That's really a way to go. I would concentrate within half an hour of where you live. Okay, because you might have to drive to these places. I'll even go as far as if you get a yes, I want to talk to you, call me. I will go with you if it's in Orange County once, and I will walk you through the process. Okay, once.

Buy your lunch with that? Always. Huh?

Oh man, no, dinner, dinner I'm usually at home. So does that answer your question? Okay.

What's how many roughly? How many average three four quarter in Orange County?

You know, I looked it up when I got here. It was 500. Yeah.

Actually, it's way up from yes 2020. Yes, way up.

Yeah. But never— not even close to 2008.

Of course.

Yeah, but it is going up. Yes. Probably gonna go even more. Yeah. Yes.

PropertyRadar information for foreclosures, is it more accurate than PropStream? Same.

Okay. Um, okay, so PropertyRadar is more accurate, but they've got They get the same information, but for some reason PropertyRadar has been out there longer, so they have more useful information.

They're more active, I think, in California too.

Yeah.

Oh, good.

Yeah. And yes, you'll find those. Again, we went door knocking last week. We talked to somebody, oh, I've already paid this off. I've taken care of it. Or, I'm not in foreclosure. Yeah, if you want to say that, you know, fine. What am I going to do, you know, argue with you there at the door? If they were in foreclosure, what are the odds of them paying this off? Zero. Zero.

If your monthly is like $1,500, no, you could afford paying.

If your monthly is $1,500, No, no, no, zero. Foreclosure, it's too late to contact.

If you pre-foreclosure, then it's not too late. Correct.

Once it forecloses, it's done. Yes, you have to do it beforehand. Once it's done, it's done. And no, you can't call the bank and say, hey, can you give me a list of your foreclosures? Yeah, who are you? Yeah, I don't know you. Bye. Have a nice day. They won't even tell you have a nice day. They'll just hang up on you. Yeah. Any other questions? No? You have my contact information. I'm available for what? Lunch or coffee. I will answer my phone if you have any questions, burning questions. Send me an email, I'll reply to you. My office is on the other side of the freeway, right off of Lake Forest. So it's very close. Where, where, oh, you're coming from Irvine?

Irvine.

Yeah, you're not too far.

No.

Yeah. I do train people how to do fix and flips. I'm training her back there, a group of 2 other ladies, and he went with us the other day. And then I also have another gentleman, and that's what I have right now that I'm training. Other than Alex is doing three rehabs with me right now.

Email me.

You have to get your own contractors though.

That's the hard part. Some people don't share as their contractors.

They'll share their contract. I have 22 flips. Should I share my contractor?

No.

And if your contractor's good, they're stupid. You got that many flips.

Yeah, yeah, I know. I, I have 3 crews running with projects. I cannot give 22 projects to one contractor. He, he would— anybody would get overwhelmed with that.

Yeah.

Not— you can't do it. My son-in-law takes care of all that stuff, the contractors, and he's literally running around 24/7, literally running around taking care of whatever. A lot of times he gets pictures of the problems and they call him and then resolve it that way because we have flips, San Bernardino, out in the desert, Up in the mountains, Riverside, all over. They're not something you're going to drive to right away. But those are the properties that we like because they're just— I'm going to describe to you what they are. If you know what a hoarder house is, that's what we buy. A hoarder house is just messed up inside. That's what we buy. Tenants in place or not? It doesn't matter to us. We will get the tenants out. Most of the time we just give them cash and get them out. So they're renting $600 a month and we give them $3,000 or $4,000. They think like, okay, Christmas came early, and they get out. And the ones that don't get out, it takes us a month or 2 to get them out now. We're back to normal. It takes us a month or 2 to get them out. So you can evict them?

When you get a property with a tenant, can you basically evict for any reason?

Yes.

Even if they keep paying? Yeah, there's actually a law in California that if you buy a property and you're going to renovate it, that you can kick the tenant out.

If you renovate or move back in? I'm going through that with my property right now.

Correct.

It's just new since January 1st, 2020. Say somebody, I'm selling the property, here's 60-day notice, that doesn't work anymore.

Yeah.

Learned that real quick for the last couple weeks.

Any other questions? We have this room till 9 o'clock, so please, if you heard somebody in an introduction that you want to talk to, please introduce yourself. Everybody wants to go introduce themselves to Eric over there. Because Eric, Eric needs the practice of talking to investors. So introduce yourself to Eric and tell him what you do. Okay? Any other questions? No? Thank you.

Thank you.